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Legislature > House of Representatives > House Research > Taxes > Major State Aids & Taxes

Major State Aids & Taxes: Motor Vehicle Sales Tax

Program Description

The motor vehicle sales tax is imposed on new and used motor vehicles at the time of sale. It is imposed in lieu of the general state sales tax on the sale price of motor vehicles, minus any trade-in allowance. (A flat fee of $10 is imposed upon most motor vehicles that are ten or more years old in lieu of the motor vehicle sales tax; the flat tax in lieu is $150 for certain collector vehicles and fire trucks.) The rate is 6.5 percent, the rate of the general state sales tax prior to the 2008 passage of the constitutional amendment that increased the general sales tax rate to 6.875 percent, with the increase dedicated to outdoor heritage, clean water, parks and trails, and arts and cultural heritage. The increase did not apply to the motor vehicle sales tax.

The table below lists the allocation of the motor vehicle sales tax from fiscal year 2004 through fiscal year 2012 and following years.

Allocation of Motor Vehicle Sales Tax Revenues
FY 2004-2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012+
Highway user tax distribution fund 30.00% 38.25% 44.25% 47.50% 54.50% 60.00%
County state-aid highway aid 0.65
Municipal state-aid highway aid 0.17
Metropolitan transit 21.50 24.00 27.75 31.50 35.25 36.00
Greater Minnesota transit 1.43 1.50 1.75 4.75 4.00 4.00
General fund 46.25 36.25 26.25 16.25 6.25 0.00
Note: Allocations for transit in fiscal years 2010-11 are capped at fixed dollar amounts, with any excess under the percentage allocations going to the highway user tax distribution fund.

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Tax Amount and Reporting

Calendar Year 2013 Motor Vehicle Sales Tax: $621.9 million

The total 2013 motor vehicle sales tax is $621.9 million. The Department of Public Safety collects the motor vehicle sales tax. Due to the method of collection, the amount of actual tax liability from each county is not available. The state total is allocated to counties based on two equally weighted factors:

  • the number of passenger vehicles and pickup trucks registered in each county, as recorded by the Department of Public Safety
  • motor vehicle registration tax by county, as estimated by the Department of Public Safety

Vehicle counts served as a proxy for the residence of vehicle owners, who pay the sales tax. Motor vehicle registration tax estimates serve as a proxy for the value of vehicles purchased.

Motor vehicle sales tax data was obtained from the Department of Transportation.

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Recent Law Changes

2005 Laws:

At the 2006 general election, the voters approved the constitutional amendment dedicating all motor vehicle sales tax revenue to transportation purposes. The constitutional language also requires that "no more than 60 percent" of the revenue go to the Highway User Tax Distribution (HUTD) fund, and "not less than 40 percent" go to public transit assistance (Minn. Const. art. XIV, sec. 13). These distribution limits establish a ceiling for allocation to highways. Within the distribution limits, the Constitution allows legislation to set the actual division between highways and transit.

2007 Laws:

2007 legislation established a motor vehicle sales tax phase-in schedule, shown in the table on the preceding page. In fiscal year 2012, after the phase-in is fully completed, the revenues will be distributed 60 percent to highways and 40 percent to transit, with the transit portion divided 36 percent for the metropolitan area and 4 percent for greater Minnesota.

2009 Laws:

As part of the 2010-2011 budget, the motor vehicle sales tax phase-in schedule was adjusted to provide additional funds to both metropolitan and greater Minnesota transit.

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Per Capita Maps

Map of motor vehicle sales tax per capita by countyMap of motor vehicle sales tax per capita by economic development region

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The Past Five Years of the Motor Vehicle Sales Tax

The table below shows the distribution of motor vehicle sales tax in thousands of dollars for the past five years for the state and economic development regions. The graph shows total dollars of motor vehicle sales tax for that same time period in nominal and constant (inflation-adjusted) dollars.

Motor Vehicle Sales Tax: Calendar Years 2009 to 2013
Nominal dollars, in thousands
2009 2010 2011 2012 2013 5-Yr. Chg. Aid
State $442,322 $468,512 $538,490 $578,405 $621,909 41%

Northern Regions
Northwest (1)
Headwaters (2)
Arrowhead (3)
West Central (4)
Five (5)
East Central (7E)
8,133
6,416
27,698
19,274
14,465
14,448
8,677
6,814
29,198
20,559
15,201
14,973
9,953
7,802
33,266
23,591
17,343
17,056
10,768
8,357
35,565
25,354
18,478
18,184
11,576
8,982
37,922
27,253
19,752
19,468
42
40
37
41
37
35

Southern Regions
Six East (6E)
Upper MN Valley (6W)
Central MN (7W)
Southwest (8)
Nine (9)
Southeastern MN (10)
10,608
4,506
33,206
11,168
20,131
41,844
11,206
4,812
35,358
11,909
21,430
44,197
12,857
5,521
40,809
13,755
24,549
50,608
13,804
5,960
43,994
14,756
26,273
54,184
14,831
6,333
47,774
15,850
27,909
58,043
40
41
44
42
39
39
Total Nonmetro $211,895 $224,334 $257,111 $275,676 $295,695 40%

Metro Region
Hennepin County
Ramsey County
Remaining Metro
91,666
37,676
101,084
97,917
39,800
106,461
112,930
45,275
123,174
121,676
48,157
132,896
131,181
51,677
143,356
43
37
42
Total Metro $230,427 $244,177 $281,379 $302,729 $326,214 42%

Statewide Motor Vehicle Sales Tax

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March 2017

House Research Department  ♦  600 State Office Building, Saint Paul, MN  55155  ♦  House.Research@house.mn  ♦  651-296-6753